Sep 21, 2008 - Morgan Stanley Becomes a Bank Holding Company

Beginning with the Lehman collapse on September 15, 2008, Morgan Stanley’s Prime Brokerage services suffered massive liquidations.

Hedge funds pulled out more than $32 billion over three days. Although their liquidity pool was strong, assets shrank by more than 50% within one week.

In need of emergency liquidity, Morgan Stanley applied to become a Bank Holding Company.

The Fed approved this application on September 21, 2008 – without the five-day antitrust waiting period.

This action allowed the firm access to the Fed’s Discount Window as well as the government bailout program (TARP).

On September 29, Morgan Stanley accepted a $9 billion financial injection from Mitsubishi UFJ in return for a 21% stake in the former investment bank.

Morgan Stanley received $10 billion in TARP funding and repaid the entire amount, including interest and dividends, by June 2009. 

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